Enbridge Profit Drops on Derivatives,

Feb. 15 (Bloomberg) -- Enbridge Inc., the largest
transporter of Canadian crude to the U.S., said fourth-quarter
profit declined on derivatives contracts losses and a reduction
in the value of its offshore natural gas pipelines.

Net income dropped to C$146 million ($146 million), or 18
cents a share, from C$159 million, or 21 cents, a year earlier,
the Calgary-based company said in a statement today. Excluding
one-time items, per-share profit missed the 44-cent average of
14 analysts’ estimates compiled by Bloomberg. Sales fell 1.9
percent to C$7.17 billion.

Added production from Alberta’s oil sands and the Bakken
Shale formation has prompted Enbridge to expand and reverse
pipeline routes to refineries on the U.S. Gulf Coast and in
Canada’s eastern provinces. The company today said it will join
with Energy Transfer Partners LP on a project to convert the
Trunkline system from natural gas to oil, moving crude between
Illinois and the Gulf.

“Western Canadian and United States north western crude
oil production is facing significant market access
constraints,” Chief Executive Officer Al Monaco said in the
statement. “As a result, price discounting of this oil
production relative to global pricing continues to be a major
industry concern.”

Enbridge owns and operates Canada’s largest oil-pipeline
network, spanning 24,738 kilometers (15,372 miles) and shipping
more than 2.2 million barrels of crude and liquids a day,
according to its website. The company is investing C$15 billion
in the next three years to add capacity for 1 million barrels of
Alberta crude, Monaco said in a speech last month.

Gas Cost

Quarterly earnings from its liquids pipeline division fell
33 percent to C$136 million from C$203 million a year earlier,
as the company reported a loss from derivatives contracts on the
Canadian Mainline system.

The company also reported a C$105 million cost for certain
offshore pipelines, mostly gas systems in the Gulf of Mexico.
Enbridge said it explored alternative uses for the system and
because of “changing competitive conditions in the fourth
quarter of 2012, the company concluded that such alternatives
were no longer likely to proceed.”

Enbridge rose 0.5 percent to C$44.36 at the close in
Toronto. The shares have gained 3.1 percent this year and have
15 buy, one hold and two sell ratings from analysts.